DNO ASA, the Norwegian oil and gas operator, today announced a 50 percent hike in 2018 spending in the Kurdistan region of Iraq to USD 250 million net to the Company on the back of higher revenues and regular export payments.

Annual 2017 revenues stood at USD 347 million, up 72 percent from 2016, bolstered by fourth quarter revenues of USD 116 million, the highest quarterly level in more than three years.

The Company fast tracked the development of the Peshkabir field with two wells currently producing a total of 16,000 barrels of oil per day (bopd) and commingled for export with another 97,000 bopd from the other DNO-operated field, Tawke, on the same license.

DNO’s Executive Chairman Bijan Mossavar-Rahmani:

“We made the Peshkabir Cretaceous discovery early in 2017, initiated early production in June, tripled output by year’s end and already have exported two million barrels with an estimated value of USD 100 million – more than twice the investment to date. And we have only started to appraise and develop this field which continues to surprise to the upside.”

A total of six Peshkabir wells will be drilled this year with field production expected to reach 30,000 bopd by summer and continue to ramp up in the second half of the year.

At the Tawke field, plans are being finalized with partner Genel Energy plc to drill four wells in 2018, in addition to the currently drilling Tawke-48 well slated for completion by end-February.

Elsewhere in Kurdistan, DNO has re-entered and sidetracked the Hawler-1 well to appraise the Benenan heavy oil field in the Erbil license, achieving a technical milestone with the first ever multilateral well and the first ever dual completion in Kurdistan. Testing will commence shortly, and if successful, will be followed by additional wells.

The Company received 12 monthly Kurdistan export payments during 2017 totaling USD 380 million net to DNO. The landmark August 2017 receivables settlement agreement, which increased DNO’s stake in the Tawke and Peshkabir fields from 55 percent to 75 percent plus three percent of gross license revenues over five years, contributed to higher export payments.

Operational cash flow more than tripled to USD 339 million in 2017 and DNO exited the year with a net cash position of USD 30 million versus net debt of USD 139 million at end-2016.

Iraq reportedly plans to increase production at the Majnoon oilfield from 240,000 bpd now to 450,000 barrels within three years.

Ahmed Abdul Razzaq, the head of a committee in charge of developing the field, told Reuters that the Basra Oil Company (BOC), which will take over operations from Shell, is studying proposals from three oilfield services companies to boost output at the field in southern Iraq.

Genel Energy has issued a trading and operations update in advance of the Company’s full-year 2017 results, which are scheduled for release on 22 March 2018. The information contained herein has not been audited and may be subject to further review.

Murat Özgül, Chief Executive of Genel, said:

“A strong final quarter of 2017 completed a very positive year for Genel. During the quarter, the successful Peshkabir-3 well result tripled production at the field to c.15,000 bopd, a figure that is expected to grow in 2018, while at Taq Taq the TT-29w well was brought on production.

“Payments for oil sales were received from the Kurdistan Regional Government (‘KRG’) in every month of 2017, totalling over $260 million net to Genel and leading to $140 million of free cash flow in the year. The 2017 payments were bolstered by the receipt of override payments in the fourth quarter under the Receivable Settlement Agreement (‘RSA’), and payments have continued in early 2018.

“The recently announced CPRs reaffirmed the potential of the Bina Bawi and Miran fields, with combined 1C gross raw gas resource estimates higher than the gas volumes agreed under the Gas Lifting Agreements. The upstream field development plans are expected to complete shortly, and will help define the roadmap to unlocking the value in these major resources.

“The successful debt refinancing in late 2017, and the expectation of ongoing material free cash flow, provides us with a solid platform and financial flexibility to execute our growth plans during 2018 and beyond.“

2017 OPERATING PERFORMANCE AND 2018 ACTIVITY OUTLOOK

2017 net production averaged 35,200 bopd, with Q4 averaging 32,760 bopd. Production and sales by asset during 2017 was as follows:

(bopd)

Export via pipeline

Refinery sales

Total sales

Total production

Genel net production

Taq Taq

11,700

6,350

18,050

18,050

7,940

Tawke PSC

108,250

10

108,260

109,050

27,260

Total

119,950

6,360

126,310

127,100

35,200

Note: Difference between production and sales relates to inventory movements

Tawke PSC (Genel 25% working interest)

Tawke PSC production averaged 109,050 bopd in 2017, with aggregate production from the Peshkabir-2 and Peshkabir-3 wells contributing 3,590 bopd to this figure. Combined production from the two fields currently averages c.110,000 barrels of oil per day

Preparations are underway to drill the Peshkabir-4 well. Additional drilling activity is planned on both the Tawke and Peshkabir fields during 2018, with overall activity levels dependent on production performance, drilling results, field studies, and ongoing payments from the KRG

Taq Taq PSC (Genel 44% working interest and joint operator)

Taq Taq field production averaged 18,050 bopd in 2017

Production in Q4 2017 averaged 14,035 bopd (Q3 2017 14,080 bopd). Ahead of the completion of a number of wells in Q4 2017, the overall rate of production decline slowed during the year due to the implementation of a proactive well intervention and production optimisation programme

In 2018 to date, production from Taq Taq has averaged 14,540 bopd, with the TT-29w, TT-30, and TT-31 wells contributing to the stabilisation in production from the beginning of Q4

As previously announced in late 2017, the TT-29w well was brought onto production after encountering a deeper free water level and more extensive oil bearing cretaceous reservoirs on the northern flank of the field than previously forecast. The results of the well will be analysed ahead of finalising the 2018 drilling programme, with field activity likely to be weighted towards the second half of the year. The ongoing Taq Taq well intervention programme, focused on the provision of artificial lift and water shut off in existing wells, will continue throughout 2018

Going forward, the Company will revert to reporting Taq Taq field production on a quarterly basis, as part of its corporate level disclosures

Bina Bawi and Miran (Genel 100% and operator)

As announced on 23 January 2018, Genel has agreed a 12 month extension to the conditions precedent schedule contained within the Gas Lifting Agreements for the Bina Bawi and Miran PSCs

CPRs for the Bina Bawi and Miran West gas fields concluded a c.40% increase in the combined 2C gas resources compared to the pro-forma end-2016 2C resource

The field development plans, being carried out by Baker Hughes, are on schedule to be completed shortly, and will help define the roadmap to unlocking the value of the assets

Genel will continue its systematic efforts to maximise the value of Bina Bawi and Miran, which includes optimising the cost and schedule of the proposed upstream developments

§ In 2018 Genel expects to undertake an extended well test of Bina Bawi-4, which will provide valuable data on well deliverability and gas composition

The Company will continue to build momentum behind the development of Bina Bawi and Miran, and will continue engagement with potential farm-in partners for upstream participation at an optimal time to secure maximum value for Genel shareholders

African exploration update

Onshore Somaliland, the acquisition of 2D seismic data on the SL-10B/13 (Genel 75%, operator) and Odewayne (Genel 50%, operator) blocks has now completed – the first time that seismic has been obtained in this highly prospective area for over 25 years. The project acquired c.3,150 km in total, including infill 2D seismic acquisition of targeted high-graded areas. Processing of the data has commenced, and will facilitate seismic interpretation and the associated development of a prospect inventory, in turn guiding the optimal strategy to maximise future value

As announced in November 2017, Genel’s prior commitment to drill one well on the Sidi Moussa licence, offshore Morocco (Genel 60% working interest), has been replaced by an obligation to carry out a 3D seismic campaign across the Sidi Moussa acreage, significantly reducing anticipated expenditure. Planning is ongoing, with seismic acquisition set to begin in 2018, which is expected to materially de-risk the prospectivity of the Sidi Moussa licence

FINANCIAL PERFORMANCE

$263 million of cash proceeds were received in 2017 ($207 million in 2016), of which $72 million was received in Q4

Following the signing of the Receivable Settlement Agreement, effective 1 August 2017:

$19 million in override payments for the Tawke field were received in Q4

An additional $7 million of cash flow was generated from the elimination of the capacity building payment on Genel’s profit oil from the Tawke PSC

$19 million in payments for oil sales during October 2017 received post-period in January 2018

Free cash flow (pre interest payments) totalled $140 million in 2017

In December 2017, the Company successfully completed the refinancing of its existing bonds, reducing the outstanding bond debt from $421.8 million to $300 million by way of an early redemption of a notional amount of $121.8 million. The new 5 year bond has a coupon of 10% per annum

Following the successful refinancing, unrestricted cash balances at 31 December 2017 stood at $162 million ($268 million at 30 September 2017). IFRS net debt at 31 December 2017 stood at $135 million ($138 million at 30 September 2017)

Capital expenditure for 2017 totalled $95 million (in line with guidance), with the majority of spend on the Taq Taq and Tawke PSCs ($64 million)

2018 GUIDANCE

Combined net production from the Tawke and Taq Taq PSCs during 2018 is expected to be close to Q4 2017 levels (as disclosed above)

Capital expenditure net to Genel is forecast to be c.$95-140 million, spanning a range of firm and contingent spend, with activity levels dependent on ongoing drilling results and progress on Miran and Bina Bawi. It is expected that capex will be funded entirely from operational cash flow, and includes:

Tawke and Taq Taq net to Genel of $60-85 million

Miran and Bina Bawi capex of $25-40 million

African exploration cost of $10-15 million

Opex: c.$30 million

G&A: c.$15 million cash cost

Based on a continuation of payments throughout 2018, Genel expects to generate material free cash flow in 2018

As the Kurdistan Regional Government has promised, and to prove its commitment to transparency in the entire oil and gas sector of the Kurdistan Region, today the first report by the international auditing company, Deloitte, is released.

The report, which includes verified numbers of export and sales of oil in the Kurdistan Region for the first six months of 2017, is available to the public.

According to the validated numbers, the total revenue generated from oil sales is 3,328,211,119 US Dollars, after deducting expenses. The average oil sales price for that period was 41.29 $/bbl for exported barrel of oil through pipelines, at a time when average Dated Brent price was approximately 51.71 $/bbl.

The auditing project was ordered by the Council of Ministers of the Kurdistan Regional Government through Decision No. (73) on 3rd of February 2016, as a continuation of Oil and Gas Law, and Oil and Gas Trust Fund Law.

In a transparent process and in accordance with the World Bank guidelines, the Regional Council for Oil and Gas Affairs invited the Big Four international auditing firms in the world and consequently signed Master Service Agreements (“MSA”) with Deloitte and Ernst & Young, after following international tendering standards. According to the MSA’s, the oil and gas sector will be subject to audit, including the historical data.

The Kurdistan Regional Government considers the auditing process as an important step for strengthening transparency in the oil and gas sector of the Kurdistan Region. The KRG has approved Deloitte’s recommendations to further enhance the processes and address any shortcomings. The KRG is also working to develop the accounting and auditing capabilities of the financial monitoring agencies in the Region, in order to empower them for future projects.

This is the first time that reputable and major international companies audit the oil and gas sector in the Kurdistan Region. In the near future, the validated numbers for the second half of 2017, and for the past years will be released to the public.

Denis Sugaipov, head of Gazprom Neft’s department of large projects, told Reuters that the consortium running the project has proposed setting the output plateau for the next few years at its current level of around 85,000 bpd, as the field is more geologically complex than previously thought.

This is half the level initially planned as a plateau to be reached in 2017.

The field is being developed by Gazprom (30%), KOGAS (22.5%), Petronas (15%), TPAO (7.5%), Iraqi state-owned Oil Exploration Company (25%).

According to Reuters, $4.0 billion has been invested in the plant so far, including $1 billion for a gas processing plant; another $2.5 billion is planned to be invested by 2030.

Gas Plus Khalakan (GPK), the sole contractor of the Khalakan PSC in the Kurdistan Region of Iraq, has issued an end-2017 operations update regarding the Shewashan field.

Oil Sales:

Total payments received by GPK for oil sales now amount to $9.0 million representing 190,115 barrels of GPK entitlement oil sold through to the end of September 2017. Sales from October to December has been invoiced through the traditional operating procedures in place with the KRG Ministry of Natural Resources.

Oil Production:

In total, cumulative field production to date exceeds 1,300,000 barrels of oil. Current total field production is 1,000 barrels per day. Total oil production for the 3rd quarter 2017 was 81,207 barrels and 422,027 barrels have been produced in 2017, up to and including 1 December 2017.

These amounts are significantly below that required to meet forecast annual production targets and break-even economics. There are two main reasons for this lower production.

Firstly, water production rates in the Qamchuga formation have limited oil production rates. The Qamchuqa formation is heavily fractured and many of these fractures are connected to the aquifer.

Secondly, production rates from the Shiranish and Kometan reservoirs have been limited, due to these formations having a tight matrix, with their fracture network being not as developed and extensive as in the Qamchuqa reservoir. GPK continues to recomplete the four Shewashan wells to limit water production in the Qamchuga and stimulate the Kometan and Shiranish reservoirs to facilitate greater production rates.

This activity is summarized below:

Shewashan #1:

Current production rate: 350 bopd and <5% water cut from the Qamchuqa reservoir. Recompletion plans include: perforation and acid stimulation of the Kometan reservoir.

Shewashan #2:

Current production rate: 650 bopd and low water cut from the Kometan reservoir. Recompletion plans include: Larger acid stimulation in the Kometan to increase the production from perforated intervals (45m) and a possible propped hydraulic frac in the Shiranish reservoir which has yet to be tried in the field.

ShaMaran Petroleum reports that operations in the Atrush field in Kurdistan are continuing in a normal, safe and secure manner.

Atrush is currently producing at approximately 27 thousand barrels of oil per day (“bopd”) and exports are continuing via the Kurdistan Export Pipeline system. Atrush exports for the month of December averaged 26,163 bopd and benefitted from a higher facility uptime than the 90% previously projected.

Currently the production facilities are limited to processing approximately 27,000 bopd of the total 30,000 bopd capacity due to low ambient temperatures which limits the amount of heat available to process the oil to export specifications.

Plans in 2018 include debottlenecking the production facility and proceeding with the testing, completion and tie-in of the Chiya Khere-7 well which was drilled towards the end of last year.

DNO ASA, the Norwegian oil and gas operator, today announced a tripling of production from the Peshkabir field in the Tawke license in the Kurdistan region of Iraq to 15,000 barrels of oil per day (bopd) following completion of the Peshkabir-3 well testing, stimulation and cleanup program.

A total of 11 zones in a 1.2 kilometer horizontal section of Cretaceous and Jurassic reservoir in the Peshkabir-3 well were individually tested and flowed successfully, of which ten were oil zones and one a gas zone.

The oil zones tested an average of 5,340 bopd per zone on a 64/64″ choke, with the highest individual test rate of 7,200 bopd. A multi-zone combined production test totaled 12,500 bopd on a 128/64″ choke from five zones.

Production from the previously drilled Peshkabir-2 well, in operation since May, together with that of the new Peshkabir-3 well are currently processed through temporary test package facilities and trucked to DNO’s adjacent Tawke field facilities for export.

As previously announced, the Tawke license partners are proceeding with fast track plans to commission an early production facility by yearend and complete installation of pipeline connections early in 2018 to allow ramp up of output at the Peshkabir field.

Preparations are underway to drill the Peshkabir-4 well which will also be designed to test the underlying Triassic reservoir.

DNO operates and has a 75 percent interest in the Tawke license, with partner Genel Energy plc holding the remainder. The license contains the Tawke and Peshkabir fields whose combined year-to-date production has averaged 110,000 bopd.